Hypnotics such as benzodiazepines and benzodiazepine receptor agonists are often prescribed for insomnia. Among Veterans attending outpatient clinics, approximately one-quarter use hypnotics (or bedtime alcohol). Hypnotics use is associated with an increased risk of falls and worse cognition in older adults. Discontinuing hypnotics often attenuates or reverses these negative effects, and the Department of Veterans Affairs (VA) has initiatives to reduce hypnotic use among older adults. Current discontinuation strategies focus on tapering off the hypnotic and/or treating insomnia symptoms. Common strategies include supervised gradual taper (SGT), cognitive behavioral therapy targeting hypnotic withdrawal (CBT-HW), cognitive behavioral therapy for insomnia (CBTI), and combination therapy (SGT+CBTI). Yet up to 40% of patients eventually resume use of hypnotics with these strategies, suggesting that other mechanisms need to be targeted to achieve and sustain high rates of non-use. Another mechanism that may be a viable target for achieving hypnotic discontinuation and sustaining long- term non-use is the placebo effect, which is characterized by real improvements in sleep arising from psychosocial aspects of treatment rather than drug effects alone. We recently developed and tested the feasibility of an intervention that targets the placebo effect. Our intervention retains core components tested in prior studies for achieving hypnotic discontinuation (i.e., SGT+CBTI), but adds a novel feature??masked? tapering. Masking is achieved by encapsulating hypnotics (prepared by a compounding pharmacy) so the patient, who has consented to a gradual taper, is unaware of the actual dose in each capsule until the end of the taper, when the tapering schedule is revealed to the patient. Towards the end of the taper, placebo capsules are used. Through novel cognitive exercises, the therapist uses masking as a tool to challenge expectancies about hypnotics, which may be contributing to chronic use, and to augment CBT-HW (e.g., preparing for withdrawal). Coupled with CBTI (i.e., stimulus control, sleep restriction, cognitive therapy for insomnia, and relaxation), the intervention targets the placebo effect and the factors contributing to insomnia symptoms and helps patients safely taper off their hypnotic. Objectives: 1) To assess the efficacy of Masked Taper plus cognitive behavioral therapy-augmented program (MTcap) on hypnotic discontinuation among older Veterans, 2) to determine the impact of the MTcap intervention on insomnia severity, 3) to assess the impact of the MTcap intervention on participants' beliefs and expectancies for using hypnotics to improve sleep quality and daytime function, and 4) to assess the efficacy of MTcap on balance and cognition. To achieve these objectives, we propose to conduct a randomized clinical trial in older Veterans recruited from a single VA site. Veterans will undergo a 3-step screening process (letter with opt-out card, telephone screen, and in-person screen). Eligible participants (N = 132) will be randomized to 8 weeks of MTcap arm or SGT+CBTI. The MTcap arm will include gradual withdrawal plus CBTI & CBT-HW augmented with masking/placebo pharmacotherapy and novel CBT exercises addressing expectancies for hypnotics. The SGT+CBTI arm will use conventional medication packaging (bottle). Key outcomes will include hypnotic discontinuation and use (measured objectively through lab testing and medical record review/state prescription monitoring database query, and subjectively through sleep diary), insomnia severity, beliefs and expectations about hypnotics, balance, and cognition. Using quantitative methods, we will measure the effect of the MTcap intervention on hypnotic use, insomnia severity, beliefs/expectations for using hypnotics, balance, and cognition. This hypnotic discontinuation program could be an important tool to help older Veterans who want to discontinue hypnotics to achieve this goal.